Tesco Commits To Keeping Prices Down, With Help Of Suppliers

The pledge by Tesco – echoing that of Sainsbury’s, Lidl and Aldi in recent days – suggests the sector faces a price war at a time when suppliers are looking to pass on higher commodity and supply chain expenses.

Tesco stated that it will try to mitigate inflation for consumers through its cost-saving programme. The retailer also plans to buy stock in larger volumes and vowed to work collaboratively with suppliers to keep down prices.

NamNews Implications:

• One could say that in keeping prices down for the past 10 years…
• …state-of-art retailers have exhausted all slack in the efficiency system…
• …meaning there is little further scope for squeezing savings.
• Besides which, as suppliers know, scale purchasing can rarely translate into significant price discounts..
• Meanwhile, with very real inflationary costs already in the system…
• …the market has to move prices in tandem, obviously by instinct rather than by discussion.
• In which case, it only takes one retailer holding back on price increases to gain a real competitive advantage…
• (Say a discounter large enough to lower profits at the expense of its global portfolio)
• i.e. Hold onto your hats, folks!

#Inflation #Competition #SupplierFairShare #GSCOP

Aldi Won Christmas On Social Media

Analysis by Social Media Management platform Maybe* ranked the major supermarkets according to those who most successfully engaged customers from social media posts across Facebook, Twitter and Instagram.

The analysis showed that whether it was gin or caterpillar shaped birthday cakes, Aldi led the way throughout 2021 in the social media stakes with its ongoing disputes with Marks & Spencer.

NamNews Implications:

• Humour: a high-risk, high payoff strategy.
• Requires careful handling, reader-insight, and generosity...
• …but ‘Bingo’ if it strikes a chord.
• (and is worth/easy to pass on/re-share)
• We are entering even more serious, inflationary times...
• ...but well-placed humour has to pay dividends.
•  But it needs to translate to sales, rather than simply leave a warm glow...
• (but feeling better helps!)

#Controversy #competition #Humour

Recovery Continues At Boots Ahead Of Potential Sale

Walgreens Boots Alliance (WBA) raised its full-year profit guidance yesterday after both its US and UK businesses delivered better-than-expected sales performance during its first quarter, aided by vaccination activity and surging online sales.

In the UK, comparable retail sales at Boots jumped 16.3%, recovering from the significant declines last year when its high street and travel sites were impacted by lockdowns, and shoppers turned to supermarkets for their health & beauty needs.

NamNews Implications:

• Clearly the future of Boots lies in success online…
• (and optimising their consumer franchise in terms of patient/healthcare)
• Especially given the assessment anticipated from Private Equity companies.
• Meanwhile, suppliers proposing online-based initiatives will have the most appeal in the current situation…

#BootsTakeover #BootsFuture

Tesco And Discounters Best Performers Over Christmas Period; Supermarkets See Record Own Label Sales As Inflation Accelerates

Given weaker overall sales than 2020 when Covid restrictions boosted demand in supermarkets to record levels, the market share data from Kantar showed consumers treated themselves during the festive season, but with more premium own-label ranges as inflation in the sector pushed up the cost of grocery shopping.

NamNews Implications:

• Note Tesco Finest & Sainsbury’s Taste the Difference as premium O/L performers
• (particularly if you subscribe to the belief they are better than National Brands…)
• Also ‘grocery price inflation reached 3.5% in December’ as a rehearsal for Inflation-2022!
• …driving discounter share growth resulting from an inevitable discounter-driven price war.
• As always, key is how your Christmas sales compared, by format and category.

#LatestGroceryShares #ChristmasTrading2021

Consumers Buying More Premium Own-Label Ranges Despite Rising Prices; Tesco And Discounters Gain Share

All the major grocery retailers in the UK saw their sales fall over the 12 weeks to 28 November against tough comparatives with last year when Covid restrictions were reintroduced. The data from Kantar also suggests that rising food prices aren’t impacting people’s desire to treat themselves over the festive period.

Take home grocery sales fell by 3.8% during the period as consumers ate out more compared with 2020. However, sales remain strong compared with the market before the pandemic, and grocery spend was 7.0% higher in the latest 12 weeks than in 2019.

NamNews Implications:

• Key issue is growth of premium private label at the expense of equivalent national brands.
• The fact that the quality of premium private label can be equal or even better than national brands at the same price…
• …means better value for money…
• …and probably a permanent shift in allegiance.
• A backdrop of the remorseless growth of online and the discounters…
• …where higher pipeline inflation has not really kicked in yet.
• Means seatbelt tightening a default option for 2022…

#PremiumPrivateLabel #DiscounterShare #OnlineShare

WBA Exploring Sale Of Boots

Following on from rumours last month, a new report has suggested that Walgreens Boots Alliance (WBA) is lining up advisers to explore options for its Boots chain in the UK, including a sale that could value it at as much as £10bn.

According to Sky News, WBA will hire Goldman Sachs to examine the hiving off of the health & beauty chain, potentially via a sale or separate listing.

NamNews Implications:

• NAMs have two options:
• Await a formal announcement re new owners.
• Conduct some what-ifs on possible outcomes and steal a march on rivals.
• Either way, one outcome will be possible prices & terms disparities re a new retail rival.
• (…off or online…)
• In which case, best harmonise now before the new combo do it on your behalf…
• Or in the case of a PE purchase, prepare for a whole new way of dealing with Boots.
• See The Implications of Private Equity Takeover of a Mult

#TradeConcentration #Consolidation #Takeover

Aldi’s Christmas Ad The Most Effective

Research by Kantar, which combined consumer survey responses with facial recognition AI technology, has found Aldi’s ‘Kevin the Carrot’ campaign to be the most effective of 24 festive adverts tested this year.

It scored in the top 6% of all UK ads in terms of being both ‘distinctive’ and ‘enjoyable’, and was also the campaign that sparked the most conversation. After Aldi, Coca-Cola was the second-best overall, followed by Lidl...

NamNews Implications

• A particular emphasis on friends and family says it all...
• Note: Retailers (especially discounters!) came late to advertising!
• Watch again for proof positive

#DiscounterWinners

Issa Brothers Mulling Merger Of Asda And EG Group

The entrepreneurs and private equity partners TDR Capital have recently been reviewing options to break up their 6,000-strong global forecourt empire. However, Bloomberg News reported on Friday that a merger of their two businesses is being discussed to create a combined entity valued at around £26bn, including debt.

NamNews Implications:

• A listing in the short or even medium-term i.e. going public unlikely (debt)…
• Australian petrol sites sale a probability to simplify holdings (and raise some cash)
• Suppliers should anticipate amalgamation, if only to optimise buying power…

#Amalgamation #Simplification #CoreBusiness #Optimisation